Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

86. To ask the Minister for Finance the engagement he has had with the insurance industry in relation to business interruption caused by Covid-19 and in the event of further outbreaks of Covid-19 in 2020 and 2021; the impact the UK High Court test case on business interruption by the UK Financial Conduct Authority will have on businesses here but with insurance policies provided or underwritten by UK companies; and if he will make a statement on the matter. [10396/20]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I am aware that there have been many concerns expressed about how the insurance industry is responding to the needs of its business policyholders in these difficult times, particularly in terms of honouring business interruption claims. I have considerable sympathy for such policyholders, however the Deputy should note that I have no legal authority to compel an insurer to pay a claim as this forms part of a contract between the insurer and the policyholder. However, as a general rule, I believe that insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage. Insurers should engage with those businesses honestly, fairly and professionally to honour those elements of the policies covered, in line with the Central Bank’s Consumer Protection Code. The Deputy should note however that neither I, as Minister for Finance, nor the Central Bank have any role in adjudicating on such matters. If there continues to be a disagreement between an insurer and a policyholder, then the appropriate channels for resolving them must be followed i.e. use of the Financial Services and Pensions Ombudsman (FSPO) or litigation. In this regard, I understand that there are a number of cases that have been referred to the FSPO or where litigation has been initiated.

The above said however, my officials and I have been engaging with the sector in an effort to get some much needed certainty for business policyholders. On business interruption claims, I wrote to Insurance Ireland on 27 March and indicated amongst other things that

(i) insurers should not attempt to reject claims on the basis of interpreting policies to their own advantage; and,(ii) that where a claim can be made because a business has closed as a result of a Government direction due to contagious or infectious disease, that the recent Government advice to close a business in the context of COVID-19 should be treated as a direction.

Insurance Ireland, on behalf of its membership, responded on 3 April and stated that it accepted both of my points. It did however indicate that each insurance policy is different and there may well be other factors which lead to the adjudication of whether a business interruption claim is valid or not, other than Government advice to close. Following on from this correspondence, I held a teleconference with Insurance Ireland, on 17 April, where I reiterated that some insurers, by adopting a “blanket” rejection of all business interruption claims, were doing the industry significant reputational damage and were not treating customers fairly.

My view in relation to business interruption and insurance should there be any further outbreaks of COVID-19 later this year or next year remains as it is for the current outbreak, that is, if a policy has an infectious diseases clause which does not exclude COVID-19, then as a general rule I believe they should honour it.

In relation to the actions of the UK’s Financial Conduct Authority (FCA), I understand that the FCA is taking a test case to the UK High Court on the issue of business interruption insurance to achieve clarity for all parties concerned. In an update on their website on 1 June, the FCA stated that they have reviewed over 500 relevant policies from 40 insurers. They have identified a sample of 17 policy wordings that capture the majority of the key issues that could be in dispute. They will take these policy wordings to court, with insurers given a chance to file defences. I understand that a full court hearing is scheduled for the second half of July. Given that the FCA test case is still ongoing, it is still too early to say what the impact of any decision of the UK High Court would have on the Irish operations of UK-based insurers in terms of business interruption insurance claims. As I have stated already, it is not my role to adjudicate on such matters as Minister for Finance, and additionally it would be inappropriate for me to provide commentary on an ongoing court action, including one in another jurisdiction. That said, I would hope that UK insurers operating here would apply any favourable findings from a policyholder perspective, to their Irish policyholders, where applicable. My Department will be monitoring the test case and consulting with the Central Bank of Ireland on any potential implications it may have for Irish customers of these UK firms.

Finally, I believe it is important that other business interruption issues, such as the need for forbearance for businesses, are addressed also by UK-based insurers in the Irish market. My understanding is that they are aware of the forbearance arrangement I announced with Insurance Ireland in April, however a number of them have made the decision not to apply it for their own particular reasons. It should be noted again that I have no influence over these companies in relation to their day-to-day commercial decisions, however I think their response to their Irish customers is unsatisfactory and I have asked my officials to contact a number of the companies to ask if they could reconsider their decision. My Department will keep me updated on any developments in this area.